You get that, but the common debate seems to be that gold is the investment of a lifetime when it is little more than an on-again, off-again inflation hedge. Hence, Buffett does not buy gold for improved performance in Berkshire's portfolio.

When you are Warren Buffett you don't need gold. Your investments are always going to beat the devaluation of the dollar because you own politicians that will grant favors to the companies you invest in and prop up the cartels you invest in. He has no need for a stable store of value.

Thing is...most of us view gold as a "savings" not as an investment. If gold moves at precisely the rate of the dollar inversely then it at all times maintains it's true value and neither increases nor decreases in value. If you buy one ounce of gold and the dollar falls 300% you can turn around, sell that gold and buy the exact same amount of product as you could have when you initially bought the gold as the gold would be worth 3x as much but prices would have inflated 300%.

Last edited by Perry; 02-27-2012 at 02:09 PM.

“First they ignore you, then they laugh at you, then they fight you, then you win.”
-Mohandas Karamchand Gandhi

Gold has gone from ~$250 to ~$1750 in the past decade. It's not as if the prices of everything (or anything) else has multiplied by 7 in that time frame. Rent around here is about the same. I can still get a double cheeseburger off the McDonald's dollar menu (OK, they only give you one slice of cheese these days).

So while my gold may have just been "sitting there" all that time it's certainly done a lot more to help me feel secure in my future financial stability than my baseball cards.

Not understanding this proves that Buffet is just the luckiest of the 6 billion monkeys playing on the stock market. A monkey that later evolved in a creature doing all kinds of shenanigans in order to stay wealthy.

I am an engineer and according to my knowledge, WTC 1, 2 and 7 came down in a controlled demolition on 9/11/2001.

When you are Warren Buffett you don't need gold. Your investments are always going to beat the devaluation of the dollar because you own politicians that will grant favors to the companies you invest in and prop up the cartels you invest in. He has no need for a stable store of value.

Interesting. And when gold goes down in price, it's all manipulation, am I right?

I'm not saying I agree with everything he says, but he makes some interesting points. In his recent annual letter to his shareholders, Buffett said the following about gold (see pg 18-19):

The major asset in this category is gold, currently a huge favorite of investors who fear almost all other
assets, especially paper money (of whose value, as noted, they are right to be fearful). Gold, however,
has two significant shortcomings, being neither of much use nor procreative. True, gold has some
industrial and decorative utility, but the demand for these purposes is both limited and incapable of
soaking up new production. Meanwhile, if you own one ounce of gold for an eternity, you will still
own one ounce at its end.

This is a load of bull$#@! because although strictly true, the underlying implication is that gold is primarily held as an investment. For those who do so hold this commodity, Buffet's words are marginally correct. Some of those speculating on gold futures will make out like madmen while others may lose their shirts. The rational basis for holding significant gold assets is not as an investment in the typical sense, but as a store of value. This is particularly so in an environment of lousy currency, the dollar already having become an example. Buffet speaks a twisted truth that I could only take as knowingly intentional. Such people do not make errors of this type in documents of this sort.

What motivates most gold purchasers is their belief that the ranks of the fearful will grow.

Most? Really? Has he asked them all? The accent here, I suspect, issues from the fact that he is speaking through his $#@!.

Admittedly, when people a century from now are fearful, it’s likely many will still rush to gold.

There is a good reason for this, and it is not because they are stupid.

Our first two categories enjoy maximum popularity at peaks of fear: Terror over economic collapse
drives individuals to currency-based assets, most particularly U.S. obligations, and fear of currency
collapse fosters movement to sterile assets such as gold.

Bull$#@! again because the proper role is as a value store, not as an interest bearing asset.

I don't know what his game is here, but I question his sincerity because his knowledge would be difficult to impeach.

--
"When it comes to rule making, our first duty is to make rules for our own conduct. If we don't, then we run afoul of violating other people's rights to freedom. Freedom is not an outcomes-based approach to solving social problems. It is a start and it is a moral premise. It says that no one has the right to trespass on another person, but outside of that you are free to pursue whatever makes you happy." -John Houlgate

Today the world’s gold stock is about 170,000 metric tons. If all of this gold were melded together, it
would form a cube of about 68 feet per side. (Picture it fitting comfortably within a baseball infield.) At
$1,750 per ounce – gold’s price as I write this – its value would be $9.6 trillion. Call this cube pile A.
Let’s now create a pile B costing an equal amount. For that, we could buy all U.S. cropland (400
million acres with output of about $200 billion annually), plus 16 Exxon Mobils (the world’s most
profitable company, one earning more than $40 billion annually). After these purchases, we would
have about $1 trillion left over for walking-around money (no sense feeling strapped after this buying
binge). Can you imagine an investor with $9.6 trillion selecting pile A over pile B?

And with the 1.5 Quadrillion derivatives market you could buy up all real estate and companies on earth.Who would want to invest in derivatives?
I just popped his bubble.